Ferruccio Gambino Afterword The early outsourcing of the electronics industry and its feeders

List of contributors

Flexible workforces and low profit margins: electronics assembly between Europe and China Introduction Rutvica Andrijasevic, Jan Drahokoupil, Devi Sacchetto This book investigates restructuring in the electronics industry and in particular the impact of a ‘Chinese’ labour regime on work and employment practices in electronics assembly in Europe.1 Electronics is an extremely dynamic sector, characterized by an ever-changing organizational structure, as well as cut-throat competition, particularly in manufacturing. Located primarily in East Asia, electronics assembly has become notorious for poor working conditions, low unionisation and authoritarian labour relations. However, hostile labour relations and topdown HR policies are not unique to East Asia. They have become associated with the way the sector is governed more broadly, with a number of Western companies also coming to rely on such practices.

Recent waves of restructuring have seen a number of electronics manufacturers assume new roles in global value chains, developing service and design functions. Multinationals with roots in East Asia, China and South Korea in particular have thus emerged in this sector. Some of them – Huawei being a case in point – have started to challenge lead firms such as Apple, managing to advance product development functions and to establish their own global brands. A number of these multinationals have located their production capacities in Europe. Central and eastern Europe in particular has become a base for greenfield investment in electronics assembly (see Sass 2015). This has raised concerns about the working conditions and labour relations in these plants. Are these companies recreating the authoritarian labour regimes and poor working conditions associated with electronics assembly in China and other developing countries? Have workers been able to establish effective institutions of collective representation in these firms?

1. The present volume emerged from the seminar ‘Forms of Labour in Europe and China. The Case of Foxconn’ held at the University of Padua in June 2014. The workshop brought together scholars, practitioners and activists to discuss the transnational politics of labour and workers’ struggles and featured most of the contributions contained in this book.

Flexible workforces and low profit margins: electronics assembly between Europe and China 7 Rutvica Andrijasevic, Jan Drahokoupil, Devi Sacchetto There is a surprising shortage of research into mainland Chinese multinational firms and the work and employment practices they export to their subsidiaries in Europe. Currently there are only a couple of examples of this strand of research. These are Burgoon and Raess’s (2014) study of the implications of Chinese FDI for organized labour in Europe and Zhu and Wei’s (2014) case study of a Chinese takeover of a motorcycle company in Italy. The majority of studies adopt an economic perspective and examine particular features of Chinese investment, such as location, motivation and modes of entry (Brennan 2010; Rios-Morales and Brennan 2010; Zhang, Yang and Van Den Bulcke 2012; Zhang, Duysters and Filippov 2012; Meunier 2014).

This book focuses in particular on Foxconn, the world’s largest electronics manufacturing service provider. Foxconn is best known as the main assembler of Apple’s iPhone and iPad and for the harsh working conditions in its mainland Chinese factories. These have come under close activist and scholarly scrutiny, which has brought to light the firm’s militarized disciplinary regime, unhealthy and unsafe working conditions, worker suicides, excessive and unpaid overtime, forced student labour and crammed factory dormitories (Chan and Pun 2010; Pun and Chan 2012; Chan, Pun and Selden 2013). This despotic management model prompted scholars to identify Foxconn as the epitome of ‘bloody Taylorism’ (Lipietz 1987).

Foxconn’s manufacturing centre is in mainland China, where it employs around 1 million people in 32 factories. In addition, it has more than 200 subsidiaries around the world. However, despite Foxconn’s expansion into East Asia, Latin America, Australia and Europe, there has been very little academic research on the firm’s work regimes outside mainland China.

Foxconn has become an important employer also in Europe, establishing factories in Czechia, Slovakia, Hungary and Turkey. Foxconn’s most important European site, Czechia, has become a hub for the exportoriented electronics industry. However, little is known about working conditions and employment relations in these factories. The aim of this book is to provide insight into Foxconn’s assembly plants in central and eastern Europe and into the electronics industry more broadly. Foxconn is used as a case study to examine similarities and differences in work organisation and labour practices between its factories in mainland China and those in Europe. By comparing Foxconn assembly plants in Europe, this book makes visible the ways in which the social and institutional context, on one hand, and labour force composition, on the other, shape variations in work and employment relations across different countries.

Introduction

This book asks questions about the labour regime that Foxconn has exported from mainland China to Europe and the factors influencing the adaptation of the firm’s practices in different European countries. The objectives are, first, to investigate the export of work and employment practices from Foxconn’s Chinese to its European subsidiaries and second, to examine whether and how work and employment relations established in mainland China have been adapted to the social actors and institutional context of the European host country.

The contributions show that in order to study the application and adaptation of multinationals’ work and employment practices in Europe, analyses of internationalization (home and host country effects) must include also considerations of the ways in which the state, labour and trade unions shape firms’ labour management. This book suggests further that work organisation and labour relations should be examined by paying attention to the particular nature of the electronics industry and especially the restructuring of supply chains and the role of brand-name companies in creating asymmetrical relations, imposing cost-cutting pressures and preventing labour organization and representation. Taken together, the chapters capture the overlapping influences of actors, sites and institutions, as well as the power relations between them as these inform the workings of multinationals across borders.

The volume is organized in three parts. First, we consider the dynamics of global production networks in the electronics industry and highlight the implications of the electronics industry’s governance model. We also analyse the business strategy pursued by Foxconn across the world.

Second, we present case studies of Foxconn’s European production sites, analysing the role of local institutions and individual actors. Finally, we discuss the challenges involved in organizing workers and opportunities for improving working conditions in the electronics industry through labour representation.

1. The electronics industry and the changing organization of production The continuous restructuring of global production networks is examined in detail by Peter Pawlicki, who argues that the hierarchical governance model of the electronics manufacturing service providers (EMS) and original design manufacturers (ODM) allow brand-name companies to Flexible workforces and low profit margins: electronics assembly between Europe and China 9 Rutvica Andrijasevic, Jan Drahokoupil, Devi Sacchetto push cost pressures down the chain and ultimately to the weakest link, namely the workers. The basic organizational characteristic of electronics supply chains is the dis-integration of product development and product manufacturing. While lead firms – such as Apple, Cisco, Dell, HP, HTC, Lenovo, LG, Microsoft and Sony – are increasingly focusing on product development and marketing, contract manufacturing companies specialize in producing electronic devices in huge industrial complexes located predominantly in mainland China.

By outsourcing the highly commoditized process of manufacturing to their suppliers, such as Foxconn, lead firms can focus on the most lucrative parts in the production process, namely product innovation, branding and marketing. Given the low profit margins for electronics assembly, EMS providers such as Foxconn are, as shown in Gijsbert van Liemt’s analysis of the Foxconn business model, gradually refining their design skills for a very narrow range of high-volume products so to move beyond simple assembly work and raise their profit margins. By building up and expanding its design capabilities, Foxconn is now increasingly able to offer design, development, test and marketization services, joining the Chinese companies that managed to upgrade their functions in the global production network and started to invest in both developing and developed markets.

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